People aboard a flight
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If you’re trying to decide between a credit card that offers cash back and one that offers points or miles, the answer lies with your spending habits, your credit rating, and, to some degree, your personality. To narrow your search, ask yourself these questions.

Are you practical or a dreamer?

If you’re someone who gets pleasure from checking interest earned on an investment, you may get the most satisfaction from watching your statement credit grow on a card that offers a solid 1 percent to 5 percent return. If, however, you have a specific dream you’re working toward, such as exploring the world, reward points can help get you there.

Do you prefer tricky maneuvers or autopilot?

Cash-back rewards are simple and low-maintenance – typically, 1 percent to 5 percent of your spending credited to your account. It’s like earning interest on spending. A good rewards card, on the other hand, can deliver big payoffs, if you’re willing to follow promotions and put some time into figuring out the best bang for your points.

What kind of credit do you have?

Generally, the best rewards – whether cash back or points – go to those with excellent credit scores. A good credit score (660 to 719) may qualify you for Chase Freedom Unlimited’s unlimited 1.5 percent rewards structure or the Citi Double Cash Card’s net 2 percent cash back where you earn 1 percent when you buy and 1 percent when you pay your bill. Neither of these cards charge annual fees. A strong credit score will also qualify you for the Chase Sapphire Preferred Card, where a $95 annual fee (waived the first year) gets you great travel benefits (including insurance) and flexible rewards with a variety of hotel and airline partners.

But there are some solid cards for those with just average credit scores. Like the Capital One QuicksilverOne Cash Rewards Credit Card which has a $39 annual fee and also earns 1.5 percent cash back.

What other benefits does the card have?

Rewards cards are typically valuable for three different things: the signup bonus, rewards for ongoing spending, and cardholder benefits. Two out of three may be enough. Given the devaluation of the airlines, for example, airline miles don’t deliver as much as they once did. You’re better off earning 1 percent cash back than a mile per dollar on an airline card. Keep in mind that if you fly often on one particular airline, it may be worth signing up for that airline’s credit card just to score the signup bonus – and hold onto it if it also offers money-saving perks like free checked bags or priority boarding.

What’s more important right now: cash flow or travel?

If you’re starting a family or saving for a home, maximizing travel rewards may not be your top priority. But if you’re on the road a lot, miles or hotel points may allow you to experience travel at levels you would never pay for out of pocket. The best value for travel reward points: upgrades on international travel. If you’re gunning for two weeks abroad, a hotel card with a strong overseas presence like the Starwood Preferred Guest Credit Card might be worth a look.

What do you spend the most on? If you’re commuting long hours and/or feeding a family, maybe you want a card that rewards groceries or gas – or a rotating-category card that rewards both. Or maybe it makes more sense to focus on building your credit score and cash reserves with a straight cash-back card that you pay off every month.

Whatever rewards card you decide to pursue, make sure it fits the life you’re leading now, and provides a payoff you can get behind.